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A suit by 70 million car owners against the nation’s insurance industry quietly disappeared in the hands of the 11th U.S. Circuit Court of Appeals. A three-judge panel on Nov. 18 dismissed the case after deciding that the defendant insurance companies were immune from an antitrust suit. The suit claimed the companies conspired to provide policyholders with inferior repair parts that would not restore cars to their pre-crash condition. The 17-page decision by Senior Judge James C. Hill sidestepped a debate over class certification and held that the case fell within the protections of a 1945 federal law that banned antitrust cases concerning the “business of insurance.” In deciding the case on those grounds, the panel settled a back-and-forth debate within the 11th Circuit over whether the court would consider the antitrust law defense at all. Orders from the court first declined to review the issue, then vacated the first order, then stated again that the antitrust issue would not be discussed. The antitrust question, centered on the 1945 McCarran-Ferguson Act, continued to bother the panel of Hill and Judge Gerald B. Tjoflat of the 11th Circuit and Senior Judge Richard H. Mills of the Central District of Illinois. “After oral argument of this appeal, we became concerned that McCarran-Ferguson might indeed exclude [the plaintiffs'] claim from federal antitrust jurisdiction,” Hill wrote. Their concern led to a sua sponte inquiry into the issue, he added. Congress passed the 1945 law, Hill wrote, “to allow insurers to share information relating to risk underwriting and loss experience without exposure to federal antitrust liability and to preserve for the states the power to regulate the insurance industry.” The law exempts insurance companies from antitrust actions that challenge activities deemed to be “the business of insurance,” among other criteria. According to Hill, the plaintiffs argued that their claims attacked “the business of insurers” — the defendants’ arrangements to save money by requiring the use of replacement car parts that were not made by original equipment manufacturers, or OEMs. “Insurers,” Hill added, “characterize [the plaintiffs'] claim as an attack on both their rate-making and the performance of their insurance contracts — activities at the heart of the business of insurance.” Gilchrist v. State Farm, No. 03-10799 (11th Cir. Nov. 18, 2004). The plaintiffs relied on two U.S. Supreme Court decisions that cleared the way for antitrust cases against insurance companies that did not challenge “the business of insurance.” In Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205 (1979), the high court dealt with a suit by a pharmacy challenging cost-cutting agreements insurers had made with other pharmacies. In Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119 (1982), the plaintiffs were chiropractors who challenged a peer-review process used to decide whether chiropractic charges were necessary and reasonable. In both cases, the suits did not affect the relationship between insurer and insured and, thus, were not about “the business of insurance,” wrote Hill. But in this case, Hill concluded, the plaintiffs were suing about excessive premiums for inferior repair work and the insurers’ alleged failure to perform their obligation under the policies — both attacks on “the business of insurance.” A lawyer for the class, Robert Stephen Berry of Washington’s Berry & Leftwich, could not be reached. Holland & Knight’s Jerome W. Hoffman, who represented defendant GEICO, said the court’s decision means the plaintiffs’ claims are “a state regulatory matter,” not one for the courts. A partner in the firm’s Tallahassee, Fla., office, Hoffman said lawyers for the defendants were gratified by the decision, but not particularly surprised because they thought a trial judge’s decision to certify the class of 70 million was wrong. Hoffman added that the back-and-forth nature of the 11th Circuit’s focus on the antitrust question was “not the ordinary way” issues get handled.

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